Special economic zones and local economic activities in Ethiopia

Do Special Economic Zones (SEZs) boost local economic activity in Ethiopia? Although SEZs have been an integral part of Ethiopia's industrial growth over the past 15 years, their local impacts remain understudied. This paper uses satellite-based nighttime light data and a difference-in-differences approach to assess the effects of SEZs across districts. Results show that SEZ-hosting districts saw an average 18% increase in economic activity, with no spillovers to neighbouring districts. The impact is more substantial for larger and publicly owned SEZs. The findings suggest that while SEZs effectively promote local economic development, their spatially concentrated benefits call for complementary policies to extend growth beyond host districts.